Ore output could rise 7-10% in FY14

Seen even higher if Goa mining resumes

With the Supreme Court giving a green signal for reopening of mines in Karnataka, India's iron ore production is set to increase this year by seven to 10 per cent, compared to last year. Iron ore production witnessed a decline of 14.7 per cent to 145 million tonnes (mt) for FY13, compared to 170 mt in the previous year.

During FY14, iron ore production could touch 155-160 mt, a growth of seven to 10 per cent, assuming there is further delay in reopening of mines in Goa. The rise in production would be on account of reopening of mines in Karnataka, and it is projected the state would contribute in the range of 17 mt. Although the apex court had on April 18 approved reopening of Category A and B mines, a large number of mines are yet to secure several other statutory approvals, which would take about six months.

"The opening of mines in Karnataka would take at least six to eight months, and we expect the state to contribute about 17 mt this year. And if the mines in Goa resume towards the second half of the current financial year, we can estimate the total iron ore production to go up to 160-170 mt," said Prakash Duvvuri, research head at OreTeam, a Delhi-based research firm.

The domestic iron ore production had seen its lowest level of 145 mt during 2004-05, and it had peaked in 2009-10 to 220 mt.

For the current financial year, the main contributors to domestic production would be Odisha, Chhattisgarh and Jharkhand, while Karnataka and Goa are likely to stay next to these three states in terms of total state-wise production.

"There could be some mining in Goa towards the end of this fiscal. If that happens, the overall production from India would be slightly better than last year. It will all depend on how fast Karnataka mines resume production and the apex court verdict on Goa," said Ritesh Shah, lead analyst at Espirito Santo, a brokerage firm.

According to Shah, Odisha and Chhattisgarh would contribute half of India's production at about 80 mt, with Odisha alone accounting for about 50 mt. Karnataka and Jharkhand could contribute almost equal quantity at 17-19 mt this year.

The Goa government suspended mining after the Shah Commission report was tabled in Parliament on September 12, 2012. This was followed by the suspension of environment clearances for all 93 mining leases by the Union Ministry of Environment and Forests.